UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: March 31, 2002 Commission File Number 0-32353
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EASYWEB, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 84-1475642
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6025 South Quebec Street, Suite 150, Englewood, Colorado 80111
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(Address of principal executive offices) (Zip code)
(720) 489-8873
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, no par value 4,506,200
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Class Number of shares outstanding at May 3, 2002
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This document is comprised of 10 pages.
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FORM 10-QSB
1ST QUARTER
INDEX
Page
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, March 31, 2002 (unaudited) .................. 3
Condensed statements of operations, three months ended March 31,
2002 (unaudited) and 2001 (unaudited), and September 24, 1998
(inception) through March 31, 2002 (unaudited) .................... 4
Condensed statements of cash flows, three months ended March 31,
2002 (unaudited) and 2001 (unaudited), and September 24, 1998
(inception) through March 31, 2002 (unaudited) .................... 5
Notes to unaudited condensed financial statements .................... 6
Item 2. Plan of Operation ........................................... 8
PART 2 - OTHER INFORMATION
Item 1. Legal Information ........................................... 9
Item 2. Changes in Securities ....................................... 9
Item 3. Defaults Upon Senior Securities ............................. 9
Item 4. Submission of Matters to a Vote of Security Holders ......... 9
Item 5. Other Information ........................................... 9
Item 6. Exhibits and Reports on Form 8-K ............................ 9
Signatures ........................................................... 10
Part 1. Item 1. Financial Information
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EASYWEB, INC.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
March 31, 2002
Assets
Cash ...................................................... $ 5,316
Web site development costs, net ........................... 781
---------
$ 6,097
=========
Liabilities and Shareholders' Deficit
Liabilities:
Accounts payable and accrued liabilities ............. $ 5,192
Indebtedness to related parties (Note B) ............. 344
---------
Total liabilities 5,536
---------
Common stock subject to rescission,
16,000 shares (March 2000) (Note D) .................. 4,000
---------
Shareholders' deficit (Note D):
Common stock ......................................... 116,050
Outstanding stock options ............................ 20,600
Additional paid-in capital ........................... 39,666
Deficit accumulated during development stage ......... (179,755)
---------
Total shareholders' deficit (3,439)
---------
$ 6,097
=========
See accompanying notes to condensed financial statements
3
EASYWEB, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
September 24,
1998
Three Months Ended (Inception)
March 31, through
-------------------------- March 31,
2002 2001 2002
----------- ----------- -----------
Revenue:
Commissions, related party .................. $ -- $ -- $ 4,000
Commissions, other .......................... 1,610 340 4,587
----------- ----------- -----------
Total revenue 1,610 340 8,587
----------- ----------- -----------
Operating expenses:
Stock-based compensation .................... -- -- 26,600
Rent (Note B) ............................... 1,000 -- 6,333
Contributed rent (Note B) ................... 500 1,500 11,167
Administrative support (Note B) ............. 285 292 6,501
Contributed administrative support
(Note B) ................................ 2,715 2,708 28,499
Salaries and payroll taxes .................. -- -- 20,729
Professional fees ........................... 5,197 8,009 45,560
Web site consulting and maintenance ......... 250 216 13,009
Information technology agreement ............ -- -- 8,269
Advertising ................................. -- -- 12,034
Depreciation and amortization ............... 188 188 1,627
Other ....................................... 696 788 8,014
----------- ----------- -----------
Total operating expenses (10,831) (13,701) (188,342)
----------- ----------- -----------
Operating loss (9,221) (13,361) (179,755)
Income taxes (Note C) ............................ -- -- --
----------- ----------- -----------
Net Loss $ (9,221) $ (13,361) $ (179,755)
=========== =========== ===========
Basic and diluted loss per common share .......... $ (0.00) $ (0.00)
=========== ===========
Basic and diluted weighted average
common shares outstanding ................... 4,429,095 3,590,200
=========== ===========
See accompanying notes to condensed financial statements
4
EASYWEB, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
September 24,
1998
Three Months Ended (Inception)
March 31, through
---------------------- March 31,
2002 2001 2002
--------- --------- ---------
Net cash (used in) operating activities ......................... $ (6,135) $ (10,256) $(104,376)
--------- --------- ---------
Cash flows from investing activities:
Equipment purchase ......................................... -- -- (400)
Payments for intangible assets ............................. -- -- (2,458)
--------- --------- ---------
Net cash (used in) investing activities -- -- (2,858)
--------- --------- ---------
Cash flows from financing activities:
Proceeds on advances from related parties .................. -- -- 10,000
Repayment of advances from related parties ................. (5,500) -- (5,500)
Proceeds from the sale of common stock ..................... 16,500 -- 118,050
Proceeds from the sale of common stock subject
to rescission ........................................... -- -- 4,000
Payments for offering costs ................................ -- -- (14,000)
--------- --------- ---------
Net cash provided by financing activities 11,000 -- 112,550
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Net change in cash .............................................. 4,865 (10,256) 5,316
Cash, beginning of period ....................................... 451 26,707 --
--------- --------- ---------
Cash, end of period $ 5,316 $ 16,451 $ 5,316
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ................................................ $ -- $ -- $ --
========= ========= =========
Income taxes ............................................ $ -- $ -- $ --
========= ========= =========
Non-cash financing activity:
Stock issued for satisfaction of debt ................... $ -- $ -- $ 6,000
========= ========= =========
See accompanying notes to condensed financial statements
5
EASYWEB, INC.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
Note A: Basis of presentation
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its Form 10-KSB dated December 31,
2001, and should be read in conjunction with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises". As of March 31, 2002, the Company has devoted
substantially all of its efforts to financial planning, raising capital and
developing markets.
Financial data presented herein are unaudited.
Note B: Related party transactions
Prepaid rent
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The Company paid an affiliate $4,000 during April 2001 to rent office space for
the period from April 1, 2001 through March 31, 2002. As of March 31, 2002, all
$4,000 was expensed as rent expense including $1,000 for the three months ended
March 31, 2002 in the accompanying condensed unaudited financial statements. The
Company's management has estimated the fair market value of the office space at
$500 per month. Therefore, an additional $500 was expensed as rent during the
three months ended March 31, 2002, with an offsetting credit to additional
paid-in capital.
Indebtedness to related parties
- -------------------------------
The Company incurred $285 in expenses to an affiliate during the three months
ended March 31, 2002 for administrative services performed on behalf of the
Company. The Company's management has estimated the fair value of the services
at $1,000 per month. Therefore, an additional $2,715 was expensed as contributed
administrative support during the three months ended March 31, 2002, with an
offsetting credit to additional paid-in capital. The Company owed the affiliate
$344 for the administrative expenses at March 31, 2002, which is included in the
accompanying condensed balance sheet as due to affiliate. The Company repaid the
affiliate in April 2002.
In January 2002, the Company repaid two directors a total of $5,500 for working
capital advances received in prior periods.
Note C: Income taxes
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses during
the three months ended March 31, 2002 resulting in a deferred tax asset, which
was fully allowed for; therefore, the net benefit and expense resulted in $-0-
income taxes.
6
EASYWEB, INC.
(A Development Stage Company)
Notes to Unaudited Condensed Financial Statements
Note D: Shareholder's deficit
Following is a schedule of changes in shareholders' deficit for the three months
ended March 31, 2002:
Deficit
Accumulated
Outstanding Additional During
Common Stock Stock Paid-In Development
Shares Amount Options Capital Stage Total
--------- --------- --------- --------- --------- ---------
Balance, January 1, 2002 ........... 3,940,200 $ 99,550 $ 20,600 $ 36,451 $(170,534) $ (13,933)
January 2002, sale of
common stock at $.03
per share ...................... 500,000 15,000 -- -- -- 15,000
January 2002, sale of common
stock to officers at $.03
per share ...................... 50,000 1,500 -- -- -- 1,500
Office space and administrative
support contributed by an
affiliate ...................... -- -- -- 3,215 -- 3,215
Net loss for the three months
ended March 31, 2002 ........... -- -- -- -- (9,221) (9,221)
--------- --------- --------- --------- --------- ---------
Balance, March 31, 2002 4,490,200 $ 116,050 $ 20,600 $ 39,666 $(179,755) $ (3,439)
========= ========= ========= ========= ========= =========
During January 2002, the Company sold 550,000 shares of its common stock for
$16,500, or $.03 per share. Of the 550,000 shares sold, 50,000 shares were sold
to officers of the Company and 500,000 shares were sold to unrelated third
parties.
Rescission offer
On July 5, 2000, the Company notified the State of Arizona that it had collected
proceeds from a common stock offering prior to meeting all Blue Sky laws
required by that State. The Company sold 16,000 shares of its no par value
common stock to three Arizona residents for $4,000 through the private stock
offering. To remedy this situation, the Company undertook a voluntary rescission
offering pursuant to R14-4-101 of the Regulations of the Arizona Corporation
Commission, Title 14, Chapter 4, as amended, which was approved by the Arizona
Corporation Commission, Securities Division on April 10, 2002. The Rescission
Offer was subsequently submitted to the Arizona investors, all of whom have
declined to rescind their shares.
7
EASYWEB, INC.
(A Development Stage Company)
Part I. Item 2. Plan of operation
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PLAN OF OPERATION
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The Company plans to continue to design, market, sell and maintain customized
and turnkey web sites on the Internet that are hosted by third parties. To date,
revenues from these services have been minimal. The Company intends to generate
increased revenue through the expenditure of additional funds for marketing,
advertising and promotion. The Company believes that the revenue generated from
operations may not be sufficient to finance future activities and that it may be
necessary to raise additional funds through equity and/or debt financing in the
next twelve months. There is no assurance that the Company will be able to
generate additional capital for marketing, advertising and promotion and/or
other purposes. In the event that only limited additional financing is received,
the Company expects its opportunities in the design, marketing, and sale of
Internet web sites to be limited.
Furthermore, if we are unable to raise additional capital to support our future
operations, we may begin exploring business opportunities for possible
investments and/or business combinations with companies that may be outside of
our original business plan. As of the date of this filing, we have had no
discussions and no agreements have been reached with any third parties regarding
such an investment or business combination.
The Company does not intend to hire any additional employees in the foreseeable
future. The Company does not intend to make significant equipment purchases
within the next twelve months.
Special note regarding forward-looking statements
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This report contains forward-looking statements within the meaning of federal
securities laws. These statements plan for or anticipate the future.
Forward-looking statements include statements about our future business plans
and strategies, statements about our need for working capital, future revenues,
results of operations and most other statements that are not historical in
nature. In this Report, forward-looking statements are generally identified by
the words "intend", "plan", "believe", "expect", "estimate", and the like.
Investors are cautioned not to put undue reliance on forward-looking statements.
Except as otherwise required by applicable securities statues or regulations,
the Company disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise. Because forward-looking statements involve future risks and
uncertainties, these are factors that could cause actual results to differ
materially from those expressed or implied.
8
Part 2. Other Information
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EASYWEB, INC.
(A Development Stage Company)
Item 1 - Legal Information.
No response required.
Item 2 - Changes in Securities.
During January 2002, the Company sold 550,000 shares of its
common stock for $16,500, or $.03 per share. Of the 550,000
shares sold, 50,000 shares were sold to officers of the Company
and 500,000 shares were sold to unrelated third parties. The
shares were sold to seven persons pursuant to the exemption from
the registration requirements of the Securities Exchange Act of
1933 (the "Act"), as amended, provided by Section 4(2) of the Act
for transactions by an issuer not involving any public offering.
Item 3 - Defaults Upon Senior Securities.
No response required.
Item 4 - Submission of Matters to a Vote of Security Holders.
No response required.
Item 5 - Other Information.
No response required.
Item 6 - Exhibits and Reports on Form 8-K.
There were no reports on Form 8-K.
9
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three months ended March 31, 2002 have been
included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EASYWEB, INC.
(Registrant)
DATE: May 3, 2002 BY: /s/ David C. Olson
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David C. Olson
President
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